Tuesday, April 21, 2015

Wink, Nod, Cough, Repeat

You can barely see the corrupt political traffic for all the polluting smoke out there. The Republicans have held up the Senate confirmation of Loretta Lynch as attorney general for six unseemly months -- based not upon on her disturbing refusal to prosecute a drug-trafficking, money-laundering, terror-profiting mega-bank, but because of their feigned concern that victims of sex-trafficking might get government-funded abortions.The Democrats, although rightly calling out the Grim Old Party for its hypocrisy and dog-whistle racism, are turning a willful blind eye to Lynch's (at worst) corruption and (at best) ineptitude. Not only did she fail to prosecute HSBC bankers for their original crimes, she's failed to prosecute them for pissing all over the sweethheart deal she gave them. The bank continued to shield wealthy clients who hide their cash in Switzerland to evade taxes. Loretta knew it, and did nothing.But Al Sharpton (allegedly) went on a hunger strike to protest GOP treatment of her. Democratic Whip Dick Durbin compared her to Rosa Parks, as though Lynch is some kind of civil rights icon rather than a revolving-door corporate lawyer who has spent much of her professional life defending white collar criminals. Even Elizabeth Warren, who can normally be counted upon to call out Wall Street corruption and government complicity and regulatory capture wherever she sees it, is staying weirdly mum on this one.

Why?

Only the Shadow knows, and the Shadow is not telling. But I suspect it has something to do with party loyalty and wedge issues and identity politics and winning, winning, winning at all and any costs. Before the Republicans accepted their plutocratic marching orders, fulfilling their assigned role of forcing Democrats to circle the wagons around Loretta Lynch out of misplaced gender, racial and party loyalty, there were, in fact, vague murmurings about her cozy relationship with Big Finance. Dave Dayen described the history in a Salon piece last fall:

Lynch’s first job was as a litigation associate at Cahill Gordon
& Reindel in the mid-1980s. Their litigation department includes the
legendary First Amendment lawyer Floyd Abrams, who defended the New
York Times in the Pentagon Papers case (Abrams subsequently argued the
Citizens United case, on “campaign money is speech” grounds). But it
also does a great deal of white-collar defense in securities and
antitrust law, representing companies like AIG, HSBC, Credit Suisse,
Bank of America and more. It’s a corporate law firm.Lynch then
served at the U.S. attorney’s office in Brooklyn for 11 years, rising to
run the office during the end of the Clinton administration, from 1999
to 2001. When she left, she became a partner at Hogan & Hartson (it
has since merged to become Hogan Lovells). It’s a giant D.C. law firm
specializing in government regulatory, corporate and financial law. Like
Cahill Gordon & Reindel, it advises all sorts of corporations, and
it even has a separate lobbying firm, one of the top five in the United
States. We know that Lynch worked on white-collar criminal defense and
corporate compliance while in private practice at Hogan & Hartson.Eventually,
Lynch went back to run the U.S. attorney’s office in Brooklyn for a
second stint in 2010, serving there until her nomination for attorney
general. But in between, she worked in corporate law and white-collar
criminal defense at two mega-law firms for nearly two decades.

To be fair, she did much pro bono work during her private career, and is rightly revered for successfully prosecuting the notorious Abner Louima gang assault-by-cop.

But another troubling -- and kind of strange -- aspect of her professional biography is her directorship of the New York Federal Reserve Board between 2003 and 2005, and her important role in getting that man-o-the people, future Obama treasury consigliere Tim Geithner, appointed as NY Fed president -- just in time for the Big Meltdown of 2008, which nobody could ever have predicted. (wing, nod, cough.)And then quick as a wink and a hack, Loretta Lynch spun through the revolving doors to the Brooklyn US Attorney's Office, where she was responsible for prosecuting settling with some of the same clients and colleagues she'd canoodled with so very recently. These included Citigroup (which, as Elizabeth Warren notes, has effectively infiltrated the Obama administration.) Lynch was able to extract a paltry $7 billion fine from a bank the size of a country, most of which came out of investors' pockets, the rest clawed back from the US Treasury in the form of tax refunds based on "losses."The HSBC deal was even worse. Not only was a major crime against humanity by the banking mafia swept under the rug via a deferred prosecution deal, the foxy cop (Lynch) in charge of the foxes in charge of hen-house apparently knew almost from the get-go that HSBC was reneging on its promise to behave itself and police itself. At the same time that the bankers admitted to aiding and abetting a consortium of vicious drug cartels, they were hiding about $120 billion of their wealthy clients' money. She saw something and didn't say something.Rolling Stone's Matt Taibbi described it as only Matt Taibbi can:

The DOJ acted very tough after the 2012 deferred-prosecution deal,
swaggering in a strangely self-congratulatory public ceremony.
Then-Criminal Division chief Lanny Breuer shared a podium with Loretta
Lynch here in New York, detailing how the bank's Mexican branches had
fashioned specially-made teller windows so that drug gangs could more
quickly slide in their cash.Still, no individual had to pay a dime in fines, and nobody was
charged. In fact, the harshest penalty any individual at HSBC had to
suffer in that case was the partial deferral of some bonuses. hat looked bad back then, but now the Breuer/Lynch deal looks
preposterous even by Eric Holder's standards. If our government knew
back then that HSBC had been engaged in a sweeping global tax-evasion
scheme, how could it have dealt out such a sweetheart deal on the
money-laundering caper after being so informed?This is a little like dropping a felony burglary charge to
misdemeanor trespassing at a time when you've found out that your
bug-eyed suspect with the rope and zip-ties in his trunk is wanted in a
string of violent home invasions in another state. It's inexplicable,
something no sane law enforcement official would ever entertain.

The equally indispensable William Black notes that the Obama Justice Department has been effectively captured by conservative economist-think, and that far from punishing HSBC officials, Lynch has actually gone out of her way to praise money-launderers and the aiders and abettors of alleged foreign terrorists. While the DOJ pleads that such banks are too big and too vital to jail, Black points out that government failure to prosecute them is a recipe for the next inevitable financial disaster. Read his whole piece, and weep. "Will the HSBC deal come back to haunt Loretta Lynch?" Taibbi rhetorically and hilariously asked just a few short months ago.

The stunning answer is that far from being haunted, Loretta Lynch is now being celebrated by the Democratic Party as a feminist icon and martyr, a hostage who is now so gloriously rescued from GOP perfidy. Loretta Lynch is such a compelling symbol of the liberal brand that all indications are that she will continue to serve under a President Hillary Clinton, whose campaign arm had been circulating a fund-raising petition in her honor.A grand bipartisan bill to combat sex trafficking will be forever positively linked to Loretta Lynch's name. Never mind that the whole controversy was a contrivance, in which Democrats pretended not to notice that the GOP had attached an anti-abortion clause to the original measure. This opened the way to five months of wedge-issue fundraising and five months of rebranding Loretta Lynch and forgetting all about her personal sleaze factor and her actual suitability for the job.

3 comments:

Meredith NYC
said...

Karen....re your comment to Krugman's Greece column:I agree we should root for Greece, etc. But re your comment “ Paul Krugman deserves praise for venturing out and visiting people where they are suffering, “ I see this differently.

Visiting Greece at all, never mind homeless shelters, may be his public relations campaign to vilify Europe, his most common topic, and scold them for austerity.

Krugman in all his world travels never compares other successful democracies with the US, despite stark contrasts, such as govt vs corporate power, govt social support programs and their better economic equality. He rightly vilifies our Gop rw, but never talks about how the conservative parties abroad do not aim to destroy their social programs, which include their middle class, not just the poor.

But Krugman likes to focus on Greece since it’s the basket case of Europe. This way he avoids talking about the many other successful nations of Europe since that might reflect on how the US is so backward and Darwinian in comparison. This would reflect badly on the Democrats and Obama. And would weaken his constant positive talk re ACA success, and the economy adding jobs, and improving somewhat, but mainly not for the average person. And his avoidance of the campaign finance issue, unique in the US, shows an obvious pattern.

When questioned at his Hunter College talk re successful EU countries’ lower poverty rates, universal h/c, and low cost education, he right away brought up Greece, the worst case, and ignored the question.

Krugman talks of heartbreaking tales, visiting a Greek homeless shelter. This dramatizes his main aim. But has Krugman ever visited any shelter for homeless in countless US cities? Would that reflect badly on the Dems? He says the Greek health care system is in collapse, with patients turned away. What about decades of US families forced into medical bankruptcies, and still suffering from financial ruin? What about the millions of Americans now left out of ACA, and our continuing high costs vs the rest of the world? In the USA, beacon of prosperity/democracy to the world---once?

Also, he might write about how other countries negotiate medical prices. Aren’t their drug and insurance co’s profitable despite that? Id think an economist would be interested in that crucial component of universal h/c the world over. But he ignores it.

I'll be addressing Greece and expanding on my Krugman comment in a future post. Meanwhile let me just say that although PK's homeless shelter visit might have been a PR stunt (similar to his visit to Zuccotti Park/OWS) my rationale in saying that he deserves praise is that if perchance he reads the comments, he'll know that any nod he gives to the "underclass" without simultaneously praising the Dems and dissing the Pubs is duly noted and appreciated by the underclass. Maybe he'll do it again, she chuckled softly to herself.

Any thoughts on the Lynch nomination and her Wall Street prosecution record?

First, I too recall Krugman’s ‘observation’ visit to Zuccotti Park, and I welcomed his line that the OWS people down there “are our neighbors.” He was one of the very few to say that, in big media. Meaning not wild anti capitalist anarchists, but you and me, standing up for the middle class.

Re Lynch...Yikes, Karen, this is a dynamite post, laying out the facts like a lawyer’s case against our top lawyer. I had read only a bit on her before. Hope you use some in a Times comment. Hard to decide which parts to pick!

Lynch gets to play the sympathetic role b/c the Gop delayed so long, dissing Obama yet again. ( btw, what an unfortunate name, in these times of serial lynchings by cops of black men, in one way or another). The Louima case cop conviction is notable--one of the few times a cop has been incarcerated, maybe?

Brooklyn had years of cop corruption/wrongful convictions by prosecutors of innocent people (not bankers) and many millions in payouts to settle lawsuits. Don’t know if related to her work.

I haven’t read this yet: NYT......“At Supreme Court, Eric Holder’s Justice Dept. Routinely Backs Officers’ Use of ForceBy MATT APUZZO and ADAM LIPTAK At the Supreme Court, the attorney general’s office consistently backs officers accused of abuse, even as it pursues civil rights investigations against several local police departments.”125 Comments

Funny, I encountered Matt Taibbi as he watched the big anti police abuse march from the Village up 5th Ave last winter. I stepped out of the march, went over and spoke to him, talking about the “Broken Windows Theory” of Policing, but not for bankers. He’d written a book re criminal justice. (I tried to read it, but it was too sad).

But I just found a past comment where I quoted some great lines from Taibbi:

First, I said---It’s ironic-- over policing of citizens for almost nothing in minority n. hoods. Thousands in street protests nation wide, against police state treatment, ignoring Equal Protection and Due Process. While the financial industry is totally under- policed, under regulated, corrupting congress, and free to ruin the economy with tax payers paying the bills. This warped contrast is well expressed by Matt Taibbi in Rolling Stone:

Taibbi:

“If Lloyd Blankfein or Jamie Dimon had come up with the concept of selling loosies, (untaxed cigarettes) they'd go to their graves defending it as free economic expression that "creates liquidity" and should never be regulated.... if Eric Garner had been selling naked credit default swaps instead of cigarettes – if he'd set up a bookmaking operation so passersby could bet on whether people made their home mortgage payments or companies paid off their bonds – the police by virtue of a federal law called the Commodity Futures Modernization Act would have been barred from even approaching him.”